Time and time again, New York has shown its resilience, and this time will not be different. We know … [+]
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In New York City, Phase 2 approaches. Planned for this coming Monday, Phase 2 of Governor Cuomo’s plan to reopen the counties of New York State will once again allow real estate brokerages to operate in New York City. Showings will re-commence, albeit in a masked, socially distanced manner. Of course, in the wake of the many protests over the past weeks, not to mention the restaurants and bars serving drinks to unmasked patrons rubbing shoulders all over town, the immediate implementation of Phase II seems less likely than when the Governor first planned it for June 22. In fact, many business owners to whom I have spoken plan to play it safe by organizing their offices to welcome workers back after the 4th of July weekend.
The big question for real estate is, re-open to what? We know there will be more property on the market, which Mike DelPrete, one of our industry’s most focused analysts, considers a precursor to a healthy market. For New York, so recently the global epicenter of COVID-19, I am not certain that is true. Throughout the United States, real estate brokerages are opening to pent-up demand. Houses all over the country which languished for months or years on the market are finding purchasers.
The pace of New York City’s recovery is today’s big national real estate mystery. In many other parts of the U.S., transaction volumes have already returned to pre-COVID levels; even in the Bay Area and greater Los Angeles new transaction volume is approaching or exceeding 60% of June 2019 numbers, according to numbers from Realogy RLGY . In New York, perhaps the last holdout of a comprehensive real estate lockdown, we are still between 80% and 90% below the second quarter in both new transaction and dollar volume. The very high-end market shows little sign of activity; what deals are being made throughout the rest of the marketplace involve buyers who saw the units they are buying before the city closed down. The few sight-unseen deals which have been made involve either new development, where buyers are accustomed to buying from plans or buildings whose benefits and layouts the buyer already knows. The notion that buyers would rent or buy based on lengthy written descriptions and beautiful video tours proved unrealistic. It just doesn’t work that way.
Everyone has read the articles about the enormous inventory pressure on communities near New York City. Westchester, Fairfield, and Essex Counties all lack enough homes to satisfy the demand from buyers seeking the kind of social distancing which involves a backyard. Fortunately, we also have glimmerings of interest from people who want to explore the New York market when it opens for showings again next week. Empty nesters from these same counties believe there will be opportunities for them, and then they will wait a year (or renovate for a year) before moving in to enjoy all the cultural benefits which New York will again have to offer them. Families of increasing or decreasing size want to change their accommodations. Everyone wants a home office (or two) or a terrace. Many new rental listings already have a queue of prospects lined up to see them in person as soon as the state allows. Time and time again, New York has shown its resilience, and this time will not be different. We know there will be a market of buyers wanting to buy and sellers wanting to sell. The question is, will their expectations align, especially with no post-COVID-19 data to support a particular position? In times of transition, both sides need to demonstrate flexibility and discard extreme positions. Often principals cannot do this on their own. This provides the opportunity for brokers to demonstrate their value.